Sunday, July 10, 2011
When Will the Parade Begin?
As of now I see no signs of a reversal candle coming. I do not like to be bullish when everyone else is bullish, and I always look for signals that the market will do something that nobody expects. Usually the signs that the market will do something unexpected are there, but they are harder to spot, and everyone is blinded by the more obvious and easier things to see. However, there are no highly alarming signs of a reversal downward here, besides one and it is somewhat minor. We close below the 1,344 level on Friday, which is pretty valid support. It was on very light volume and the bulls did put in a rather large lower shadow, and, in broader perspective, we are approaching a vacuum to the upside and prices are hanging in there. In numerical terms, any consolidation above the 1,330 level is constructive and healthy, and a break of 1,356 warrants at least an intra day tap of 1,370. A break of 1,330 means we likely reversed and long positions should be liquidated. Not an intra day touch but a decisive close beneath 1,330. Friday's down move ended well and was accompanied by light volume, providing the ingredients of that of a very bullish test. Another few days of light tests holding smartly above 1,330 should be taken as a signal to add to longs. I would like to see a tighter range to hold above 1,344, and buy volume come in. But the volume will come if we hold here, and than we are in the vacuum .
As you can see, I am leaning towards the bullish argument here. Simply because that is what the chart is telling me. That being said, the bulls are not on parade yet. I present to you this chart: